Market Update: Rates Rise; Consumer Price Index Coming Up This Week

Blog posted On November 07, 2022

The Federal Reserve raised the benchmark interest rate another 75 basis points last week. Additionally, the Federal Reserve statement hinted the Committee would discuss smaller hikes in the near future. The markets widely expected the increase and initially reacted well to the hints in the statement. After Fed Chair Powell’s press conference, they started to take a turn. While he did confirm that the Fed would discuss the easing hikes at the December meeting, he also included a lot of reminders about high inflation and reinforced the Fed’s commitment against it. Future Fed decisions are largely going to depend on incoming economic data like inflation reports and jobs reports. This week, all eyes are on the consumer price index – the most widely-used inflation report.

The consumer price index tracks the changes in the average price of a fixed basket of goods and services sold to final consumers. In September, the consumer price index climbed 0.4% after climbing 0.1% in August. Year-over-year prices rose 8.2%, slightly lower than the 8.3% increase in August. Excluding food and energy, the core consumer price index rose 0.6% month-over-month in both September and August. Year-over-year the core consumer price index climbed 6.6%. Upcoming inflation data is key to the trajectory of the federal funds rate. “We think risks to our revised FOMC rate path continue to lie to the upside and upcoming prints on CPI inflation and the November employment report will weigh heavily on the near-term path for Fed policy,” noted strategists led by Michael Gapen.

With the uncertainty of future rates, many home buyers and owners are searching for some kind of stability. A good option for many is rate locks. Another alternative is the All In One Loan^TM, an option less dependent on rates.

Sources: BLS, Mortgage News Daily, Yahoo!